Question
Peter borrows $100,000. Half of the loan is repaid by the amortization method at an annual effective interest rate of 6% with payments due at
Peter borrows $100,000. Half of the loan is repaid by the amortization method at an annual effective interest rate of 6% with payments due at the end of each year for twelve years. The other half is to be repaid by the sinking fund method with interest on the loan balance assessed at an annual effective interest rate of 5% and the sinking fund earning an annual effective interest rate of 3%. The deposits to the sinking fund are to be made at the end of each year for twelve years and to increase by 4% each year.
Find the total amount Peter pays exactly five years after he takes out the $100,000 loan.
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